Retirement income. (Ask B.E.).Q When my father passed away recently, his home was paid off. Is now a good time to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. and take equity out of the home? Is there a way to provide an income steam and retirement income? --R. Johnson Salem, New Jersey A If you've inherited inherited received by inheritance. inherited achondroplastic dwarfism see achondroplastic dwarfism. inherited combined immunodeficiency see combined immune deficiency syndrome (disease). your late father's home and don't need to share the home with siblings siblings npl (formal) → frères et sœurs mpl (de mêmes parents) , you can use the asset to establish an income stream and save for retirement. Here's one way it could be done. Once the deed to the home is officially transferred to your name (an estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the attorney can help), this would be an excellent time to take out a home equity loan for a modest amount, say $50,000, on a property appraised at $150,000. A $50,000, 15-year loan at 6% interest produces a monthly payment of $421.93. Using $10,000 to $20,000 of the home equity loan to perform routine maintenance-painting, new carpet, weatherizing-should prepare the home to be rented out for at least twice the loan payment, say $850 a month or more, depending on the average rent for homes in your neighborhood. This will produce an income stream of $428.07 a month. The balance of the home equity loan ($30,000 to $40,000) should be invested in a Roth IRA Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first each month to continue saving for retirement. The strategy you choose will depend on how close you are to retirement, your personal goals, and your risk tolerance Risk Tolerance The degree of uncertainty that an investor can handle in regards to a negative change in the value of their portfolio. Notes: An investor's risk tolerance varies according to age, income requirements, financial goals, etc. . Consult with a professional financial advisor to create an investment strategy to suit your needs. --Matthew S. Scott |
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